NVIDIA CORP. $21 - Nasdaq symbol NVDA

NVIDIA CORP. $21 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 543.5 million; Market cap: $11.4 billion; Price-to- sales ratio: 2.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.nvidia.com) is a leading designer of 3D-capable video chips, which make video games run more smoothly and appear more lifelike. The company outsources most of its production to Asian chipmakers.

In its fiscal 2015 third quarter, which ended October 26, 2014, Nvidia’s revenue rose 16.3%, to a record $1.2 billion from $1.1 billion a year earlier. Earnings jumped 43.3%, to $220.4 million from $153.8 million. The company spent $810.0 million on share buybacks in the past nine months. As a result, its earnings per share rose 50.0%, to $0.39 from $0.26.

Nvidia spends around 30% of its revenue on research, which is helping it expand into new areas, particularly chips for mobile devices. Its new Tegra chips now power Google’s new Nexus 9 tablet and Chromebook laptop computer. The company also recently launched its own tablet, called Shield, specifically for video game enthusiasts.

Meanwhile, major automakers like Honda and BMW are using Nvidia’s chips in their cars’information and entertainment systems.

The company’s new Tesla chips should provide another growth opportunity: by combining a regular processor with a graphics chip, the Tesla chips make server computers run faster while using less power.

They should help Nvidia profit from rising demand for cloud computing.

The company’s strong balance sheet will let it keep developing new products and protect its high market share. It holds cash of $4.2 billion, or $7.80 a share, and its long-term debt is just $1.4 billion.

The stock trades at 19.8 times the $1.06 a share that Nvidia should earn in its current fiscal year. The $0.34 dividend yields 1.6%.

Nvidia is a hold.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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Value Stocks

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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